Can implementing the new securities law mitigate corporate financial resource mismatch?

Yihao Li, Jierong Chen and Jian Wang

International Review of Financial Analysis, 2025, vol. 104, issue PA

Abstract: Financial resource mismatch is a significant obstacle to a nation's high-quality development. Establishing well-performing financial systems can help with efficient financial resource allocation, reduce financial resource mismatches, and promote economic health development. This paper explores the causal relationship between implementing the new Securities Law, a representative of capital market legalization, and enterprises' financial resource mismatch from 2015 to 2023. By employing difference-in-differences, this paper demonstrates how implementing the new Securities Law can significantly reduce enterprises' financial resource mismatch. The inhibitory effects are mitigated by reducing financial constraints and strengthening corporate governance capabilities. Moreover, enterprises' internal control quality and institutional investor ratio result in heterogeneous effects.

Keywords: Security market legalization; Financial mismatch; New securities law (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:104:y:2025:i:pa:s1057521925003576

DOI: 10.1016/j.irfa.2025.104270

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